Correlation Between Universal Music and Oesterr Post

Can any of the company-specific risk be diversified away by investing in both Universal Music and Oesterr Post at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Music and Oesterr Post into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Music Group and Oesterr Post AG, you can compare the effects of market volatilities on Universal Music and Oesterr Post and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Universal Music with a short position of Oesterr Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Oesterr Post.

Diversification Opportunities for Universal Music and Oesterr Post

0.29

Correlation Coefficient

Universal Music  Oesterr Post

Modest diversification

The 3 months correlation between Universal and Oesterr is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Oesterr Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oesterr Post AG and Universal Music is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Universal Music Group are associated (or correlated) with Oesterr Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oesterr Post AG has no effect on the direction of Universal Music i.e., Universal Music and Oesterr Post go up and down completely randomly.

Pair Corralation between Universal Music and Oesterr Post

Assuming the 90 days trading horizon Universal Music Group is expected to generate 1.82 times more return on investment than Oesterr Post. However, Universal Music is 1.82 times more volatile than Oesterr Post AG. It trades about -0.02 of its potential returns per unit of risk. Oesterr Post AG is currently generating about -0.04 per unit of risk. If you would invest  2,358  in Universal Music Group on September 3, 2024 and sell it today you would lose (54.00) from holding Universal Music Group or give up 2.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Universal Music Group  vs.  Oesterr Post AG

Universal Music Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Music Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Universal Music is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Oesterr Post AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oesterr Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Oesterr Post is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Universal Music and Oesterr Post

The main advantage of trading using opposite Universal Music and Oesterr Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Oesterr Post can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Oesterr Post will offset losses from the drop in Oesterr Post's long position.

The idea behind Universal Music Group and Oesterr Post AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.